GM CEO Calls for $1 Gas Tax Increase in the United States

We can hardly believe our ears! In an interview with Detroit News, General Motors CEO Dan Akerson called for a $1 tax increase on gasoline to help car manufacturers sell more fuel efficient vehicles. The statement, which is sure to shock the auto industry and Republicans in Congress, was Akerson’s way of telling those in Washington that he — and others in the auto industry — believe that higher gas prices, not fuel efficiency standards, are the best way to get more low-emissions cars on the road.

Akerson’s point is that you have to give consumers a reason to buy more fuel efficient vehicles, while also ramping up production on them. If car makers are meant to produce more low-emission cars but people are still buying SUV’s, you’re going to hurt the auto makers. If the government hikes the gas tax — which most European nations already do — people will naturally gravitate towards cars that don’t cost them an arm and a leg at the gas pump. GM already has the best-selling plug-in hybrid electric vehicle, the Chevy Volt, and one of the most fuel efficient and best selling compact car on the market right now — the Chevy Cruze.

Though the Federal tax on gas is only 18.4 cents a gallon right now, Akerson said he will not be pushing this idea through to Congress officially — though he would completely support it if it came to fruition. “As a company, we understand that’s a decision that resides with Congress and policymakers,” he said. Paul Ballew, who is the chief economist at insurer Nationwide — he used to be a director of sales analysis at GM — said that this idea is a popular one in the auto industry even though it’s not talked about often. He added, however, that it’s not likely to become a reality, “they’re not going to get it though, because that would take a lot of sanity in Washington and we’re not going to see that,” he said.

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9 Comments

lazyreaderJune 13, 2011 at 12:39 pm

@ Sanook: Your missing the point. When people talk about Europe, they envision it as some sort of pedestrian friendly fairy tale. With such prices and heavy taxation on gas we assume they don’t drive a lot. Nothing is further from the truth. America, the opinion is we are addicted to our cars. Driving accounts for 85 percent of all our personal travel. Those “green” Europeans, they drive for 79 percent of their travel. Despite heavy taxes on the otherwise cheap form of driving and the hundreds of billions they’ve spent of transit systems they drive nearly as much as we do. Private firms are building roads that operate exclusively on tolls like the Milau viaduct in France. It’s the tallest bridge in Europe and it’s payed for out of tolls because it bridges the gap in a valley one would have to drive around and take up 45 additional minutes.

Proponents often cite competition among road providers as an advantage, as road companies would have an incentive to seek innovative ways of lowering prices and improving service to gain a competitive edge. For this reason, arterials (major highways) are often viewed as a prime candidate for privatization, since there are typically many possible routes one could take to get to a particular destination, which could facilitate competition among road companies.

One economist and writer compares American traffic jams and former Soviet grocery store lines.

”In Russia communism’s failure was epitomized by constant shortages in stores. Empty shelves in supermarkets and department stores and customers in line, wasting hours each week, became the face of the system’s failure, as well as a source of huge personal frustration, even rage. Communism failed because prices were not flexible to match supply and demand; because stores were bureaucracies, not businesses; and because revenues went into a central treasury and did not fuel increased capacity and improved service. We in supposedly capitalistic America suffer communism–an unpriced service provided by an unresponsive monopolistic bureaucracy”.

Too often in the public sector, the easiest thing to do is let things sit unresolved. A private company can more easily be held accountable for negative effects of the highway than that if it is publicly owned. For example, residents living next to urban highways will benefit from noise barriers. However, campaigning for the city council to erect the walls is often ineffective and the process can take years. A private highway will try to avoid court action and feel more obliged to cater for residents. Besides, the cost of erecting the walls will be passed on directly to the drivers (who are responsible for causing the noise), rather than the general public. Private streets and avenues can reduce crime by permitting the business the authority to oust the drunks, junkies and vagrants. A person forbidden to use any city street because all the street corporations knew of his bad reputation, would have a hard time even getting anywhere to commit a crime.

Private streets may also foster small business. The cost of transportation increases disproportionately with the size of a firm; in a free market, there would be strict upper limits to the size and power of corporations, and small businesses would have natural advantages. Government subsidies to transportation, however, make large, centralized corporations artificially profitable, contributing to corporate dominance of the economy. Historically centralized industry did not develop until after the advent of taxpayer-funded roads and other transportation projects.

naive_cynicJune 13, 2011 at 12:31 pm

sanook, higher gas prices actually reduces the ability to switch to a newer car of greater mpg; it puts a strangle-hold on the lower class by lowering the value of their car, and reducing their savings to bridge that loss in value and to save up money for a down-payment.

Also, in a free economy, the government doesn’t strong-arm people into buying intelligently. Only supply and demand are the influences in a free economy.

Naive_CynicJune 13, 2011 at 8:08 am

caeman, you stole the words right out of my mouth. These CEOs don’t understand how devistating 20 cents is… They are completely out of touch with the average American salary.

lazyreader, the time has not yet come that roads are underfunded. If they ever did raise prices, say 20 cents, I would hope that would go into paying for the tax breaks that mwellis77 mentioned.

Bridges, however, are deteriorating around the country, but I don’t believe that to be a lack of funding, but ill-advised spending plans.

sanookJune 13, 2011 at 12:19 am

Some of you are missing the point and so off topic

The issue is we will never change our BIG car mentality unless we increase gas prices to force the issue as they do in Europe. The money generated from this can be used to pay down our debt.

Why you people keep yapping on the CEO’s is beyond me? You want to live in a a socialist country or maybe under communism? Then move, but in a free economy some people have a right to make BIG bucks for the most part they worked their way up there. I live in Asia, you have no idea how hard it is in many countries to get ahead in a non democratic society…..quit your complaining and go do something about it.

rich pelchJune 11, 2011 at 11:26 am

This great idea of a tax hike matches the other great idea of the Chevy VOLT which now makes the Ford EDSEL look like the best idea since sliced bread!

CFORyanIndustriesJune 9, 2011 at 12:08 pm

Let’s see….GM accepted government bailout money and now is back at the same trough looking for a way to legally intimidate the consumers? Are you flippin’ kidding me? Dan Akerson is a complete pinhead looking to justify his own existence within the company. Reminds me of Ford back in the 90′s who’s then CEO justified his ridiculous salary by making floor mats optional on all models thus alienating the loyal Blue Oval following. Wasn’t long before they became standard equipment again.

caemanJune 9, 2011 at 12:06 pm

I just love it when a millionaire proposes a cost increases that wouldn’t affect his wallet in the least, but will punish every poor and low income individual in the country. I have an idea, how about a gas tax based on your income! For every $100,000 you make over $100,000 per year (pre-tax, to avoid cheating CEOs), you pay an additional $1 per gallon in tax, thus alleviating the poor from their stupid and idiotic ideas and only punishing the wealthy for being stupid and suggesting ideas that would only harm the poor and low income.

lazyreaderJune 8, 2011 at 4:33 pm

Gas taxes are largely used to pay for roads. Since plug in cars use little or no gas at all a new way for road finance is needed. I dont really think that electric cars will make significant leeway in the near future. They’ll be important, yes……but not major player until the price comes down. The federal gasoline tax raised $25 billion on gasoline in 2006. The tax was last raised in 1993, and is not indexed to inflation. The federal gas tax has experienced a cumulative loss in purchasing power of 33 percent since 1993. I vote we get rid of the federal gas tax and hand it over to the states. Allow the states to raise their gas taxes by the 18.4 cents each and eliminate the federal one. By doing that the federal government cant earmark revenues or play with it, steal it or tamper with it. States can have full autonomy with what they do with the money and eventually get rid of the “federal” Department of Transportation.

Ultimately gas taxes are going to be an obsolete way to finance roads because they don’t adjust for inflation and doing so is kind of tedious. Inhabitat already did an article regarding Washington state’s proposal to charge fees to electric car drivers. I envision voluntary user fees will probably be a innovative way to build and operate roads in the future with an array of private firms competing to build and run them. Like those E-Z pass sensors that go on your windshield or license plate scanners that charge you on a per mile basis.

mwellis77June 8, 2011 at 1:34 pm

Not surprising – remember, former GM Vice Chairman Bob Lutz spoke for years about raising gas taxes in the U.S. The industry much prefers those kinds of consumer incentives, which are in consumers’ faces each and every time the stop at the fuel pump, to tax breaks on the purchase of a vehicle.